More mortgage choice for first-time buyers

Low-deposit mortgages are making a "strong resurgence".

Low-deposit mortgages are making a "strong resurgence" but there are not enough deals around generally to satisfy homebuyer demand, comparison website Moneyfacts has said.

The choice of residential mortgages on offer has increased over the last 12 months from 2,527 to 3,180, with 90pc and 95pc loans making notable comebacks.

But deals tend to be around for just 27 days before becoming fully subscribed, compared with the longer historic average of 30 days, Moneyfacts said, indicating a higher demand than supply.

The website found 49 mortgages currently available at 95pc loan-to-value (LTV), more than double the 24 recorded in January 2011 and a huge leap from the three found in April 2009. There are also 280 deals on offer at 90pc LTV, a rise from 199 in January last year and 72 in April 2009.

The low-deposit deals could offer signs of hope for first-time buyers, for whom the current stamp duty holiday is due to end this spring.

However, concerns have been raised that despite expanding their ranges, lenders will tighten their criteria this year amid the weak economic backdrop, meaning borrowers will face a tougher challenge to meet mortgage conditions in the first place.

The LTV tier with the biggest choice of mortgages is 60pc, with 393 deals found, up from 271 in January 2011 and 280 in April 2009.

Moneyfacts spokeswoman Sylvia Waycot said: "First-time buyers are always going to struggle to find an often unrealistic 40pc deposit, so thankfully, we are seeing the 90pc and 95pc LTVs start to return to the market.

"But a lot of providers still prefer the assurance of a proven track record which is shown by some of the incentives offered to those remortgaging such as free legal fees, free valuations or cash back.

"Despite an increasing number of mortgages appearing on the market, they are only around for an average of 27 days before being fully subscribed, which just goes to show that there are still not enough mortgage deals around to satisfy demand."